Check how much redundancy pay you can get

If you’re being made redundant, you might be entitled to redundancy pay.

You’ll only get redundancy pay if it is a genuine redundancy - check if your redundancy is genuine.

There are 2 types of redundancy pay you could get:

• ‘statutory’ redundancy pay - what the law says you’re entitled to

• ‘contractual’ redundancy pay - extra money your contract says you can get on top of the statutory amount

If you're entitled to either type of redundancy pay, it'll be paid by your employer.

Who can get statutory redundancy pay

You’ll get statutory redundancy pay if you:

• have been employed by your employer for 2 years continuously

• have lost your job because there was a genuine need to make redundancies in your workplace

You’re only entitled to statutory redundancy pay if you’re an employee.

You might be an employee even if your employer or your contract says you’re self-employed. You might not be an employee if for example you work for an agency or you’re not guaranteed to get any work.

If you’re not sure if you’re an employee, check your employment status.

If you’re on a fixed-term contract

You will be entitled to statutory redundancy pay if your employer doesn’t renew your fixed-term contract because the job doesn’t exist any more and you had either:

• a fixed-term contract for 2 years or more

• shorter contracts that followed on from each other and added up to 2 years or more

Who won’t get statutory redundancy pay

You won’t get statutory redundancy pay if you:

• have worked in your job less than 2 years

• are self-employed

• are a police officer or in the armed forces

• are a Crown servant, parliamentary staff or holder of public office (for example, a Justice of the Peace)

• are a share fisherperson

• are domestic staff working for your immediate family

• are an employee of a foreign government

Even if you can’t get statutory redundancy pay, you might be able to get contractual redundancy pay. Make sure you check your contract to see what it says about redundancy pay.

When you could lose your right to statutory redundancy pay

Even if you’re entitled to statutory redundancy pay, you could lose your right to it if you:

• turn down a suitable alternative job your employer offered you without a good reason

• want to leave before the job is due to end - for example, because you’ve found another job

• are fired for gross misconduct before your job finishes

Read more about being offered an alternative job.

How much statutory redundancy pay you can get

You can see how much redundancy pay you'd get using the redundancy pay calculator on GOV.UK.

Redundancy pay is based on your earnings before tax (called gross pay).

You’ll get more redundancy pay for each full year you’ve worked for your employer. How much you’ll get depends on how old you were during that year. You’ll get:

• half a week’s pay for each year you were aged under 22

• 1 week’s pay for each year you were aged 22 to 40

• 1.5 weeks’ pay for each year you were aged 41 or older

If you turned 22 or 41 while working for your employer, the higher rates only apply for the full years you were over 22 or 41.

Your redundancy pay will be based on a maximum of 20 years’ work. For example, if you’ve worked at your job for 23 years, you’ll only get redundancy pay based on the last 20 years you worked.

You won’t pay any tax on your statutory redundancy pay.

Work out your week’s pay

Your week’s pay is the average you earned each week in the 12 weeks before you got your redundancy notice.

There’s a maximum week’s pay that will be used to calculate your statutory redundancy - even if you earn more.

The maximum week’s pay is £700. The amount goes up on 6 April each year. The maximum week’s pay you can get depends on when your employment ends.

Check how long you’ve worked for your employer

The time you've worked for your employer is called your length of service. Work this out by counting the number of full years you've worked for your employer. Your length of service should start on your first day at work and finish on the day your employment ends.

You might be unsure what your length of service is if:

• you weren't given the statutory notice period you were entitled to
• you were given pay in lieu of notice

In these situations you can work out your length of service by adding on the amount of statutory notice you should have had. For example, if you were entitled to 4 weeks' statutory notice but your employer only gave 2 weeks, add another 2 weeks to get your end date. You can't add any extra notice your contract says you're entitled to.

Common issues with statutory redundancy pay

You’re getting sick pay

Don’t worry if you’re getting sick pay that’s less than your usual pay when you’re made redundant. Your redundancy pay will be based on your usual pay from before you were off sick.

You're on maternity leave

If you’re made redundant while you’re on maternity leave, your redundancy pay will be based on your normal pay. It doesn’t matter if you’re earning less than usual at the time you’re made redundant.

Your hours change each week

If your contract doesn’t set out your ‘normal hours of work’ (how many hours each week you need to work), your weekly pay will be worked out as an average.

The average will be based on what you earned in the 12 weeks before you were told you’d be made redundant. This includes any commission you made in that time.

People on zero-hours contracts might be entitled to redundancy pay - but it can be very complicated to work out, so contact your nearest Citizens Advice for help.

You work overtime

Your overtime won’t usually be included in your weekly pay, unless it was regular and you had to do it as part of your job.

Contact your nearest Citizens Advice for help working out what should be included in your redundancy pay.

If you’ve agreed a temporary drop in wages

If you’ve agreed to take a drop in pay because the business you work for is struggling, your redundancy pay could be affected. It depends whether you agreed to change your contract or not.

This can be difficult to work out so contact your nearest Citizens Advice for help.

If you've been laid off or put on short-time working

If you’ve been laid off or put on short-time working, and then made redundant, your redundancy pay will be based on your usual weekly pay when you did your normal hours.

The only time this won’t apply is if you agreed to a permanent change in the number of hours you work.

If your company’s been taken over

If the company you work for has been taken over through a transfer of undertaking (TUPE), working out redundancy pay can be complicated.

Contact your nearest Citizens Advice to discuss your options.

If the business you work for has closed down

There are things you can do to claim money your employer owes you - including statutory redundancy pay.

What you need to do depends on whether your employer is ‘insolvent’. This is a legal process an employer goes through if they can’t pay their debts and have to close. It’s also known as being in ‘liquidation’ or ‘administration’.

If your employer is insolvent, someone should contact you to tell you what you need to do to claim your statutory redundancy pay. 

You can also claim other money you’re owed if your employer is insolvent - for example, holiday pay or notice pay. You can get this even if you’ve worked there less than 2 years and can’t get statutory redundancy pay.

You should check if your employer is insolvent if they’ve: 

• closed down but you can’t get in touch with them
• said they’re insolvent but no one has told you what to do to claim your money - this means they might not really be insolvent

If your employer is insolvent

You’ll be contacted by whoever is dealing with your employer’s insolvency - known as an ‘insolvency practitioner’.

They’ll tell you how to apply to the government for your statutory redundancy pay, as well as other money your employer owes you. You claim this money through the ‘Redundancy Payments Service’.

Check your rights and what you can claim on GOV.UK.

If your employer isn't insolvent

You might be able to claim your statutory redundancy pay from the government. 

Before you can do this, you’ll need to go to an employment tribunal to make a redundancy pay claim. The tribunal will decide whether you’re entitled to redundancy pay or not.

If they agree that you are, you can make a claim for your statutory redundancy pay through the ‘Redundancy Payments Service’. 

You should get help from an adviser if you need to claim your statutory redundancy pay when your employer isn’t insolvent.

You’ll only be able to claim statutory redundancy pay through the Redundancy Payments Service. You won’t be able to claim any other money your employers owes you - unless they go into insolvency later.

If you don't know if your employer is insolvent

You can check if your employer is insolvent by searching the register of companies on GOV.UK. If a company on the register is insolvent, you’ll see a tab that says ‘insolvency’ on their listing. 

If you can’t find them, it might mean their company has another name that’s different to the ‘trading name’ they usually use. You might be able to find their other name by:

• checking documents they gave you - like your contract, payslips or letters
• asking the landlord of the building you worked in, if it was rented
• asking people you used to work with

If you still can’t find them, it might mean your employer’s business isn’t a company, and they're registered as a ‘sole trader’ or ‘partnership’ under their personal name.

You can search the bankruptcy and insolvency registers on GOV.UK - these let you search for a person by name, as well their business’s name.

Check if you can get contractual redundancy pay

Your employer might pay you extra money on top of the statutory amount you’re entitled to - this is called ‘contractual’ or ‘enhanced’ redundancy pay. Make sure you check your contract to see what it says.

If you haven’t been given a contract or it’s not in there, ask your employer or check your staff handbook or intranet.

By law, your contractual redundancy pay can’t be less than the statutory amount.

Paying tax on contractual redundancy pay

You don't have to pay tax on the first £30,000 of your redundancy pay. For any redundancy pay over £30,000, your employer will usually take the tax at your normal tax rate.

If your employer pays you your final pay after you leave your job, they’ll take the tax from your redundancy pay at the basic rate of 20%. If you pay a higher tax rate, you need to call HMRC to arrange to pay the extra tax.

HM Revenue and Customs Taxes Helpline

Telephone: 0300 200 3300

Monday to Friday from 8am to 8pm; Saturday from 8am to 4pm.

Relay UK - if you can't hear or speak on the phone, you can type what you want to say: 18001 then 0300 200 3300.

You can use Relay UK with an app or a textphone. There’s no extra charge to use it. Find out how to use Relay UK on the Relay UK website.

Getting advice about contractual redundancy pay

If you’re a member of a union, speak to your union rep first - they should have been involved in the redundancy negotiations.

If there isn’t a union at your work, you might have an employee representative to help you understand the redundancy agreement.

If you don’t have any representatives at work, talk to an adviser. Ask your employer for a copy of your redundancy agreement for an adviser to look at. 

Getting your redundancy pay

Your employer should pay you your redundancy pay on the date you leave work, or an agreed date soon after.

They’ll pay you in the same way they paid your wages, for example into your bank account.

Your employer has to tell you in writing how your redundancy pay was calculated and when you’ll get your payment.

Get independent financial advice

If you're not sure what to do with your redundancy pay, you might want to speak to an independent financial adviser.  For example, you might choose to put it in a high-interest account or invest it. Check how to get financial advice.

If you don’t get your redundancy pay

Your employer should pay your redundancy pay in the same way they paid your wages. If they don’t, you can take steps to get your pay.

If you need more help at any stage, talk to an adviser.

Take the following steps:

Step 1: write your former employer a letter

Tell them what you’re entitled to and include any evidence you have to back up your argument.

Step 2: early conciliation

If you don’t get your payment after sending your letter, you need to contact Acas.

Acas provides independent support to help sort out employment disputes. They'll see if your employer will agree to a process called ‘early conciliation' - a way to resolve disputes without going to a tribunal.

The quickest way to start is to fill in the early conciliation form on the Acas website. Or you can call the Acas early conciliation team on 0300 123 1122.

Step 3: take your employer to a tribunal

Your last resort is to take your employer to a tribunal. Going to a tribunal can be expensive and stressful, so it’s a good idea to get advice from your local Citizens Advice before you go ahead.

Your deadline for claiming any redundancy pay you’re owed is 6 months minus a day from the last day you were employed. If you’re also claiming for unfair dismissal or notice pay, then you have 3 months less a day.

Your employer is insolvent or out of business

If your employer has gone out of business and is insolvent, and you haven’t been paid your redundancy, use the ‘Claim for redundancy and monies owed’ service on GOV.UK.

If your employer has gone out of business but isn’t insolvent, you need to make a redundancy pay claim to an employment tribunal - contact your nearest Citizens Advice for help with this.